Catalan real estate companies have closed the first week with the rental price index in force with a negative rating. Beyond the impact it can have on income control and on market supply, companies in the sector criticize that the Central Government has activated an indicator that causes great uncertainty due to its gaps and they fear that the interpretations in when applying it may result in a conflict between owners and tenants, or in administrative sanctions for eventual errors.
The new index enabled by the Ministry of Housing offers a range of rental prices in the residential market taking into account the location, surface area and other characteristics of the homes. Income control can be applied in all municipalities that have been declared as stressed areas by the autonomous community. Large owners (more than five properties) must adhere to the index and small owners must reference their prices in the previous contract. At the moment, it only applies in 140 towns in Catalonia.
“We have received about fifty calls every day from our professionals on how to interpret different aspects of the regulations”, explains the spokesperson of the Association of Real Estate Agents (API) of Catalonia, Carles Sala. In his opinion, the Government’s work is “very poor” because the result is a rule that is difficult for owners and tenants to understand.
Sala adds that many citizens do not know that the new index is not applied in the same way as the previous one, which was in force in Catalonia for 18 months between 2020 and 2022. “Many tenants think that it works the same as the previous standard and ask for discounts. This regulation is difficult for everyone to understand. We will limit ourselves to applying the law with the best criteria we can”, he says.
The director of studies and spokesman for Pisos.com, Ferran Font, explains that real estate companies must identify large owners, but they have doubts even about defining them. “The law does not define some assumptions. The most common is how the stakes that a holder may have in different properties are calculated, but it is not the only one”, he says.
The definition of a large owner is one of the most disputed topics. The manager of the Chamber of Urban Property of Barcelona, ??Òscar Gorgues, recalls that the judges of first instance in Barcelona issued a unification of criteria months ago in which they pointed out that vertical properties will be counted as a single property, regardless of the homes of each asset. “This criterion is applied here, but the legislator should not allow each autonomy to have particularities”, he points out.
Real estate companies also have doubts about what information they should show in housing offers. Despite the repeal of the Catalan rental law, part of the regulations remain in force and require the display of information from the regional index. “There is a lot of confusion about whether to show the latest rental income or the fork of the new index”, comments Font.
The general manager of Amat Immobiliaris, Guifré Homedes, points out that there is also an important gap in relation to the new work. “There are cases of homes that do not yet appear in the index because they are in the process of being registered and they also do not have a previous contract. They remain in a limbo in which the index is not applied to them”, he complains.
On the other hand, the sector is concerned about the penalties for possible non-compliance. “The law does not provide for a sanctioning regime, so we do not know the compensations we have to deal with if mistakes are made”, Gorgues emphasizes. In this sense, he assures that the Generalitat wants to convey the possible fines through the Catalan Consumer Agency, but this decision may be counterproductive for the interests of individuals. “If the owner is a private individual, Consum has no room for action”, they point out.
At Idealista they talk about “biases” in the index. The director of the studies service, Daniel del Pozo, explains that the clearest thing is that “it only takes into account the contracts in force in 2022, without taking into account the variations recorded in the last two years”. The portal also reports that the official indicator excludes homes rented by legal entities (companies, funds and associations), which number in the thousands. It also does not include the homes of people with low incomes who are not required to submit an income tax return. Del Pozo agrees to point out that this situation and the coercive nature of the same index predict a high level of litigation in the coming months”.
